Let’s talk about management teams. This is a topic I’m asked about a lot by founders and CEOs. The questions go like this:

•    Who needs a management team?
•    When is the right time to start building a management team?
•    How do I put the right team in place?
•    How do I know if my team is working?
•    How do I build a great team?

You can call it an Executive Team, a Leadership Team (very “in” at the moment), a Senior Management Team, or if your company is small enough, just the management team. Whatever term you choose to use, this is your most important team in the long run. This is the group of people who will help you build your business.

The answer to the question “who needs a management team?” is anybody who wants more than a “lifestyle business”; anybody who wants to build a sustainable, growing company. Even lifestyle business owners reach a point where they need a team.

I’ve butted heads with a few founders over the years who think they can do it all themselves. They can’t. They are their own worst enemies when they honestly believe they don’t need anyone else to help them build the company. Most of those founders have driven their companies into the ground, been forced to shut down or sell at a dramatically reduced price. One is still hanging on by a thread. It’s painful to watch, so I don’t.

But the question of why you need a management team is a valid one. It’s worth taking a close look at as you begin to build – or build upon – your own management team.

Management teams provide two important functions: 1) the share the management workload and 2) they provide expertise, ideas and mutual accountability that make your company stronger.

As your company grows, you add people; and they can’t all report to you. Not effectively anyway. People, as you may have noticed, are more challenging to manage than, say, projects or processes. It takes face time to be a good manager. And the amount of face time you have to give is severely limited.

Your management team takes some of this off your shoulders. You give your managers the face time; they in turn give face time to their people. You have free time to do other things.

As your company grows and you add people, communication also becomes more challenging. It’s relatively easy to keep everybody focused on the common goal and operating under the same vision and values when there are only a few of you. It’s much more difficult when you aren’t personally working with everyone every day. Your management team helps spread the word and build the culture.

Building a sustainable, growing business requires technical knowledge, sales and marketing abilities, finance and accounting acumen, as well as good people skills. No matter how smart you are you can’t stay on top of all of these. For a while you might be able to get by with the help of outside services and /or consultants, but eventually you’ll want this expertise on your team fulltime – if for no other reason than to help you with the management load.

Having a good management team can challenge you to think more and to consider ideas that might never have occurred to you alone. Everyone comes to the table with not only different skills but also different experiences and points of view. These are additive.

Matt Blumberg, CEO of Return Path, relies on his management team for the following:

1.    Help create an environment for success.
2.    Nip problems in the bud, or prevent them entirely.
3.    Exploit big opportunities.

CEOs without a good management team are forever running around like a circus performer trying to keep all the plates in the air. It’s self-limiting and impossible beyond a certain point.

Which brings up another great question: when do you need to start thinking about your management team? The simple answer is it’s never to soon to start thinking about your management team. As you select, train and observe your employees, you’ll want to keep future needs in mind.

In my experience, the need for a management team ramps with the number of employees you have. I’ve seen very few leaders who can manage more than seven or eight direct reports effectively; but, someone recently pointed out, if you have the right people you can manage up to 20. Bottom line is it’s up to you and the people you have to manage.

Fred Wilson of United Square Ventures wrote a great series of blog posts on the importance of management teams in various stages of a business. The series starts here. He suggests a management team, and even management skills, are not required in the first stage of a business - building the product. It's during the second stage, which he calls "building usage", when leaders should start building a management team. And the third stage, building the business, is all about building your management team.

So which stage are you in? What will it cost you to ignore your management team?

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